Question

Consider an economy with two goods, apples (A) and bananas (B), two factors of production, labor (L) and capital (K), and two countries, Home and Foreign. Both countries engage in trade, facing prices of $30 per apple (basket) and $20 per banana (basket). The table below shows different points in this economy's PPF, and for each apple-banana basket pair, its associated slope. Suppose also that this economy spends 30% of its income in apples and 70% in bananas.

QA	0.00	1.00	2.00	3.00	4.00	5.00	6.00	7.00	8.00	9.00
QB	40.00	39.95	39.80	39.55	39.19	38.73	38.16	37.47	36.66	35.72
Slope	0.00	-0.10	-0.20	-0.30	-0.41	-0.52	-0.63	-0.75	-0.87	-1.01
QA	10.00	11.00	12.00	13.00	14.00	15.00	16.00	17.00	18.00	19.00
QB	34.64	33.41	32.00	30.40	28.57	26.46	24.00	21.07	17.44	12.49
Slope	-1.15	-1.32	-1.50	-1.71	-1.96	-2.27	-2.67	-3.23	-4.13	-6.08

How many apples and bananas will be demanded?

Answer 1